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Is Cleveland-Cliffs the Best Bet to Play the US Steel Sector?

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US steel earnings season

The fourth-quarter earnings season has ended for US (DIA) steelmakers. Cleveland-Cliffs (CLF) released its fourth-quarter earnings results before the market opened on February 8. Cleveland-Cliffs reported an adjusted EPS of $0.55, which missed the earnings estimates of $0.59. The company’s revenues were $696 million—36% higher YoY. However, the earnings missed analysts’ estimate of $715 million.

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Earnings rose

Looking at the bottom line, all of the US steel companies except U.S. Steel (X) posted better-than-expected earnings. AK Steel (AKS) and U.S. Steel’s guidance was lower compared to what the markets expected.

Higher steel prices in the first half of the year and the resulting margin expansion helped propel US steel companies’ earnings. U.S. Steel and AK Steel reported year-over-year rises in their 2018 earnings. Nucor (NUE) and Steel Dynamics (STLD) posted record earnings and shipments last year.

Series overview

In this series, we’ll gauge the direction Cleveland-Cliffs stock could take in 2019. We’ll see if the company can continue its outperformance for the rest of the year.

We’ll analyze indicators related to the domestic US steel market and the seaborne iron ore market. Indicators like US iron ore imports, US steel demand, domestic steel prices, Chinese steel demand, and seaborne iron ore demand can help us see what could drive steel prices and steelmakers’ performances in the coming months.

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